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How will the Repayment of the new IMF program loan be possible? Miftah Ismail's Analysis
How will the Repayment of the new IMF program loan be possible? Miftah Ismail's Analysis
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00:00Good enough, Mr. Miftah, to say that the 24th IMF program will be the last for Pakistan.
00:05Are we taking the steps to avoid going to the IMF after this?
00:10No, no, the government is not reforming a single penny.
00:13Mr. Arun Jaib is a very good man, he works well, he is a sensible man.
00:16But the government is not doing anything from behind.
00:18Look, I will just adjust your views, it will be understood very easily.
00:24Pakistan has to return $25 billion every year.
00:28Pakistan's current account deficit is either negative or equal.
00:32Pakistan does not receive any money every year, there is no extra dollar.
00:35When we import and export, the export is less, so we do not receive any money from there.
00:41So we have to return this $25 billion, we take a loan from someone else.
00:45If you want to give a loan to Japan, then take it from China.
00:48If you want to return it to China, then take it from Saudi Arabia.
00:50If you want to return it to Saudi Arabia, then take it from the IMF, etc.
00:53Which we generally say in the language that we are turning hats, that we are giving from here to there.
00:57Essentially, this is Pakistan's way of financing.
01:00Now when you have your program with the IMF for the next three years,
01:04they have made a projection that you have to return.
01:07You will not have $25 billion in the fourth year.
01:10Obviously, you will have to give a loan from somewhere.
01:13Now to give a loan, either you have so much,
01:16if your import is $7 billion per month at that time,
01:20then you can take a loan from a private banker, not the IMF.
01:24But the thing is that there is no such thing here that you can increase your export, increase your revenue.
01:29So what can be done about such a thing, Mr. Mifta?
01:32That we at least have to give back the loan,
01:35either increase the remittances, increase the export, or reduce the import.
01:38Can anything be done with these things?
01:40What first step can Pakistan take on this side?
01:44Are we not taking another loan to get our loan back?
01:47There is no such thing that you have taken a loan from one shop,
01:50you take a loan from another shop and return it to the first shop.
01:53There is no such thing.
01:54So what should be the first step?
01:56Look, if you don't have $25 billion extra to give in the fourth year,
02:00then you will have to take a loan.
02:02You will have to take it from the IMF too, I can assure you.
02:05What should be done?
02:06Look, there is one thing, in economics it is called the twin deficit.
02:09The greater your fiscal loss, the greater your commercial loss.
02:15Absolutely.
02:16There are a lot of complicated reasons for that, I won't go into that.
02:19But the greater your fiscal loss, you will have to borrow money from outside,
02:23which is basically that you will have to import things.
02:26That means that if you want to reduce your commercial loss,
02:30then you will have to reduce your budget loss.
02:33This means that either reduce the expenses,
02:35which the government is not in any mood to do, or increase the tax.
02:38Now, when you have put 50% tax on business individuals
02:41and 40% tax on people who have a job,
02:44then there is not much room for tax.
02:46When you have put 18% sale tax on milk and pensioners,
02:50then there is no room for tax.
02:52If you put excise tax in one or two places,
02:54look, a mini-budget is also coming.
02:56So, they will put tax in one or two places,
02:58but you can see that this year too,
03:00they are almost 100 billion rupees behind in two months,
03:03and I think they will be 800-1000 billion rupees behind in a year.
03:07So, they will have to bring a mini-budget too.
03:09Therefore, you will have to reduce your expenses.
03:12To reduce the expenses, Mr. Mufti,
03:14I am sorry, I am cutting short.
03:15To reduce the expenses,
03:17Mr. Aurangzeb has made another announcement today,
03:19that 6 ministries are over, 2 ministries are closed.
03:21Please listen to that too.
03:25Out of the 6 ministries,
03:26one of them is Capital Authority CADD,
03:29which is being abolished.
03:30There are 2 ministries that are being merged.
03:32We have now brought the next 5 ministries forward.
03:35During this fiscal year,
03:36we will continue to take 5 ministries at a time,
03:38so that by the end of this fiscal year,
03:40we will be very clear
03:41that the federal government stands.
03:43Those that have to be closed, should be closed.
03:45And the institutions that we have to keep,
03:47we should re-engineer them.
03:49Mr. Mufti, closing the ministries,
03:52will this solve the problem?
03:55Is this the right way to have austerity measures?
03:59Look, the request is,
04:00one, to reduce the expenses,
04:02but number two, what I always say,
04:04and I repeat, keep repeating,
04:06that until you see the NRC award,
04:08and you don't leave a lot of money with Wafaaq,
04:11and you don't reject taxes,
04:13you will not end your fiscal crisis.
04:16Right now, if Wafaaq wants to spend 10 rupees,
04:19he has to tax people 25 rupees,
04:21and have to give 15 rupees to the provinces.
04:23When he taxes 25 rupees,
04:25people become poor,
04:26inflation increases here,
04:27they have to take loans,
04:28and the 10 rupees that he is spending,
04:30he is spending more.
04:32This is what Aurangzeb said,
04:33he closed one ministry, CADD,
04:35which should not have been needed,
04:36because he can run the government of Islamabad,
04:38Islamabad Metropolitan Corporation and CDA.
04:40And he is merging two ministries,
04:43he left the other three ministries.
04:45He is merging them,
04:46he is not removing anyone from them,
04:47meaning that the names of both the ministries will become one.
04:50You know, if you understand,
04:51commerce and industry,
04:52you will make it commerce and industry,
04:53that's it.
04:54He is not removing anyone,
04:56he is not downsizing anyone.
04:58But the thing is,
04:59do this too,
05:00do what you are doing,
05:01I am not doing it.
05:02But number one,
05:03until you don't reject the NRC award,
05:05you will not be able to reduce the expenses of Pakistan.
05:08You have to reduce the expenses of the entire government,
05:10if you reduce the 30 to 40 billion rupees of Wafaa,
05:13then it will be a big deal.
05:15I am telling you the truth.
05:16Where Wafaa is spending 18,800 billion rupees this year,
05:20we are not even talking about 40 billion rupees.
05:22So, let's keep this in perspective.
05:26Until you tell the provinces not to stand on their own feet,
05:31and tell them to collect their own taxes,
05:33until you don't make local governments effective in Pakistan,
05:37so that there is a good delivery of services,
05:39of schools and health,
05:40and the leakages there are cut,
05:42the corruption is reduced,
05:44until you don't reduce the PSTP,
05:46which you have kept 1150 billion rupees this year,
05:49until you don't bring 300 to 400 billion rupees,
05:52those 600 to 700 billion rupees should be reduced,
05:54fill for,
05:55people should not be fired from jobs,
05:57in such a tough environment of economics.
05:59But nevertheless,
06:00these are the things they need to do,
06:02they don't do it.
06:03No government of reforms,
06:05has made a commission for the NFC award,
06:07they are talking about the fact,
06:08they are not talking about agriculture tax.
06:09By the way, Mr. Mufti,
06:10politically,
06:11politically,
06:12it is possible to make reforms on the NFC awards,
06:14because this government is already,
06:16running on the backs of the unions.
06:18The Pakistan People's Party is upset,
06:19today,
06:20the MQM is threatening,
06:21that we will leave the government.
06:23So, in such a situation,
06:24it is possible to touch the NFC awards,
06:26and on the other hand,
06:27the matter of giving money to FATA,
06:29which was agreed upon at some time,
06:31every province had some responsibility,
06:33on that also,
06:34the political leaders are raising questions.
06:36The request is that,
06:37till here,
06:38your point is correct,
06:39that this government is standing on the backs of the unions.
06:42I will perhaps take an objection on this,
06:44that whose backs are they standing on,
06:46we know this too.
06:47We also know,
06:48whose backs are the unionists standing on.
06:50So, the chiefs are not on the backs of the unions,
06:52they are doing the same thing,
06:53they understand this,
06:54that Pakistan will not be good.
06:56See, if we don't do it today,
06:57after two years,
06:58we will do it in a worse state.
06:59After two years,
07:00we will not get rid of the IMF,
07:01if we don't fix the NFC.
07:03The IMF has also said this to you.
07:05We will not get rid of the IMF,
07:06if we don't reduce the population growth rate.
07:08All of them have said this to you.
07:10We will not get rid of the IMF,
07:11if we don't educate the children,
07:12and we can't do that,
07:13until we don't reform the local government.
07:15Until you don't finish the businesses of three people,
07:17in three provinces,
07:19and leave out one province,
07:21Banj-e-Sultan,
07:22until you don't finish these businesses,
07:24you won't disperse the power,
07:26you won't disperse the resources,
07:27you won't be able to move forward.
07:28Absolutely.
07:29If you want to do this,
07:30then keep doing it.
07:31And the people have rejected these rulers.
07:34Now, you are the one who is sitting here.
07:36Let's see how long this goes on.
07:37Right.